Apr 14, 2023
In today's conversation, I am joined by McDonald’s
Lauren Kemp and Stephen Springfield from the Aspen Center for
Consumer Science. Last fall I saw them give a talk at IIEX Behavior
on how they used behavioral science to create an "irrational"
loyalty program at Mcdonald's. It was instantly clear they had to
be on the show to talk about this project, its insights, and what
you can learn from it.
It is such a great case study showing how real people
inside organizations (and in this case, working with a great
consultant), can create a program that infuses behavioral insights
in a smart way -- that is often counterintuitive – to find a
win-win for the company and its customers.
You'll also hear tips from Lauren about how she did
her literature review and lots of other great insights. And, do
know that while we joke about not loving the term "irrational" as
it is popularly used in behavioral science, if there was ever a
program that proved a lot of the choices people make aren’t exactly
rational this would be it. You'll see what I mean as they dig in on
the story in the episode…
- [00:46] In today's conversation, I am joined by
Lauren Kemp and Stephen Springfield, whom I first saw while they
were giving a presentation at Greenbook’s IIEX Behavior last
- [03:44] Lauren shares about herself and her
background. She works in consumer insights at McDonald’s on the US
- [04:41] Stephen shares about himself and his
background. Stephen is the Founder and Principal at Aspen Center
for Consumer Science.
- [06:43] Novelty and the magic of the irrational
attracted Stephen to behavioral science and behavioral
- [07:35] Behavioral science isn’t really about the
irrational and the crazy cool stuff. It is about the scientific
process applied to understanding behavior.
- [10:35] Irrationality is where all the profit
- [13:05] Lauren started her career with an internship
at Brain Juicer. They were pioneers in the behavioral economic
space. McDonald’s was one of her main clients there.
- [15:17] McDonald’s global team created the loyalty
program so the individual markets had some space to make the
program work in their specific market.
- [17:17] She started with a literature review since
loyalty programs were not new to the industry. She wanted to learn
what was most important for a loyalty program and how they could
design theirs to be successful.
- [19:45] Top tips for doing your own literature
review? Definitely start by bookmarking Google Scholar.
- [22:11] The program needed to entice customers to
engage with the program. They wanted it to be consumer
- [24:16] They knew it was very important for the
program to be transparent enough and easy to understand. Consumers
don’t like it when they feel they are being tricked or it is
clouded. Transparency is so huge in our culture today.
- [25:57] They found that the value of a loyalty
program is engagement with the program itself – not the reward that
you get. The reward you get is transactional.
- [28:27] Lauren spent a week or two on her literature
review process and Stephen’s team did some additional
- [30:39] It is important to invest the time in
research, but it probably doesn’t need to take as long as you
- [33:21] There is an aspect of irrationality and that
is where the profit is. You have to find a way to offer
something of value that is not completely transactional.
- [36:23] They wanted to find which items would drive
trips because the point of the loyalty program is to get to people
to visit more often.
- [37:58] They tested five different point levels from
1 point to 10,000 points. They found that 100 points per dollar was
easy and worked best.
- [40:03] The goal is to get somebody to purchase
something now with an eye toward achieving something later. Mental
budgeting and being able to do the math towards a simple reward was
a game changer.
- [43:05] They continued coming back to the goal and
objective: getting consumers to come to McDonald’s because they had
rewards, and they want to accumulate more rewards, and at some
point they would like to redeem those rewards.
- [44:56] They found there was some linearity with the
value of the item and the trip driving behavior, but there were
also outliers drove trips.
- [46:46] If there are products on the loyalty menu
that are a lower cost to produce that would still drive engagement
from a customer perspective and trips are a huge win.
- [49:16] Consumers can’t tell you what they would do
and why they would do it.
- [51:35] Key Insight: The thing that drives that
behavior doesn’t have to be the most expensive thing.
- [53:18] Science isn’t really interested as much in
truth as things that are reliably predictive.
- [56:07] Melina’s closing thoughts
- [57:18] It doesn’t need to take eons to incorporate
good behavioral science research into your projects.
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